Part of being a good landlord means knowing when it’s time to renovate your space. After all, if you have a nicer apartment or house that you’re renting, you’ll be able to ask for more in rent each month. The key is knowing when to renovate and where to renovate. Here are the two simple rules of thumb to go by when renovating a rental space.
When to Renovate
As the old saying goes: if it ain’t broke, don’t fix it. This is largely still valid advice. If something is not broke or in need of real repair, leave it be. For example, if your countertops are in perfectly fine condition, there won’t be any real value in installing newer, nicer ones. Aside from style and aesthetic, the return value on a project like that wouldn’t be worth it.
The same goes for appliances. While upgrading appliances can be a big plus, if your appliances all work, there’s no point in upgrading. Appliances are expensive and can be a real project to replace. Skip this unnecessary step and focus on more profitable projects.
On average, American homeowners move every five to seven years, meaning that you’ll have a slew of new renters knocking on your door soon. That said, of those who have lived in their first homes for longer than six years, 61% will choose to renovate instead of move. This goes to show that if you own a space with a high renter turnaround, renovating the space could result in your renters not wanting to move once the lease is up. At the very least, it can encourage your tenants to stay in your home longer.
This is all part of knowing when to renovate. If you’re experiencing high turnover, but nothing is really broken, this may be an exception to the rule. In this case, you’ll have to be strategic about which renovations you do.
Where to Renovate
Knowing where to renovate is going to be largely dependent on the house. However, there are a few general areas where renovations will be beneficial. For example, curb appeal is super important to potential home buyers or renters. Focus on landscaping, the front door, the siding, and even the garage and driveway to start. All of these options will leave a good first impression on potential renters. That said, curb appeal isn’t everything, so don’t go crazy on the outside and forget about the rest of your space.
Other places that have a more consistent return value are renovations to the bathrooms and the kitchen. According to Remodeling’s 2018 Cost vs Value report, you can typically expect an ROI of 70% on a bathroom remodel. If you know the bathroom could use improvement, this is a safe bet for remodels in terms of the return value. Additionally, because the kitchen is such a centerpiece for a house, this can really benefit you if you do renovations. The average ROI for a kitchen renovation is about 50%, which is great.
Make sure you do your own research about which areas of your space would benefit the most from renovations. Be sure to only fix the areas that could really use it or would give you the best return value.
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